May 7, 2019

Social Security Benefits Stump Workers

A majority of workers do not know a crucial piece of information about their retirement: how much married couples can expect to receive from Social Security.

The program will one day be the most important source of income for millions of Americans. But they showed their lack of understanding of how benefits work in a recent survey by researchers at RAND.

A previous blog covering the same survey reported on workers’ poor knowledge of the survivor benefit for widows. This blog focuses on the other benefit for couples: the spousal benefit.

Social Security works a little differently for a married couple than for a single worker, whose future benefit check will simply be determined by his or her earnings history.

For the highest-earning spouse in a working couple – usually the husband – the size of his monthly check is also based on his past earnings. But his wife’s benefit is complicated. If she didn’t work, the rules entitle her to a spousal benefit equal to half of her retired husband’s benefit. If she did work, her benefit is based on her work history – with an exception. If her benefit is less than half of her husband’s, Social Security increases her monthly check to half of his check.

Only one in three of the people surveyed understood how this works, probably partly because of the complexity.

Most workers also had misconceptions about other aspects of the program. For example, only about one in four knew that a couple must be married for more than a year for the lower-paid person to receive the spousal benefit. If a couple has divorced, the lower-earning ex-spouse gets the spousal benefit only if the marriage lasted more than 10 years. Again, just one in four workers knew this important rule.

Couples of all ages should know the rules about a program they will rely on – no retirement plan is complete without this information. …Learn More

May 2, 2019

Retiring Can Strain Food Budgets

More than 10 percent of the nation’s retirees struggle with hunger.

New research offers one explanation: when people retire and give up a regular paycheck, they sometimes adjust to having less income by reducing their food intake.

After retiring, the men in the study ate 17 percent less protein, which becomes more important as people age. Their total calorie intake also dropped 19 percent, and their Vitamin E consumption fell 16 percent, on average, according to researchers at the University of Michigan and University of Delaware. The retirees also cut back on several other nutrients.

This contradicts previous studies, which had failed to uncover a link between diet and retirement income. Skeptical of the findings, the researchers did an exhaustive study that used various types of analyses and several datasets to follow male heads of households from employment through retirement. They controlled for race, education, household size, and health.

They consistently found, across several data sources, that a drop in income reduces food intake. In fact, the effect was so large that it exceeded the impact of another dramatic financial event: unemployment among working-age people.

Although a small minority of seniors are threatened by hunger, it’s a serious problem. …Learn More